THE editorial, 'Inflation threat to savings' (ST, Dec 17), puts the spotlight on the dilemma retirees on fixed income face against rising inflation in Singapore.
With inflation expected to be around 5 per cent in the first half of next year and the several price increases seen this year, retirees will be hard pressed to preserve their savings.
Currently, the savings and fixed-deposit rates are less than 2.5 per cent on average, which is not encouraging at all vis-a-vis the 3.6 per cent increase in the Consumer Price Index in October.
To put savings into equities may look more promising but the risk of a reduced savings is very real. To put the savings back into the Central Provident Fund is not possible when you have withdrawn your money at age 55.
What then can be done to make retired senior citizens' cost of living manageable?
One way is what the Monetary Authority of Singapore (MAS) is already doing well: managing the Singapore dollar to control imported inflation.
Another way is to ensure that with rising wages and rentals, prices of food, utilities and other basic necessities are watched closely so that the low- and fixed-income groups can still afford to pay for them.
Retirees also need to be flexible when making purchases so as to have a comfortable lifestyle despite the higher cost of living.
A fourth way is to improve the savings and fixed-deposit rates by topping up banks' board rates by 0.25 per cent for seniors 60 years old and above but capped at a maximum amount.
A fifth way is the suggestion that the MAS issue inflation-indexed bonds in small denominations targeted at retired seniors and middle-income Singaporeans.
Senior citizens who are living off their savings and investments should be helped in any way possible.
